Vantage Snippets are short summaries of breaking news stories.

Disappointing Nerlynx sales shows Pierre Fabre timing is everything

Caveat emptor. Executives at French group Pierre Fabre might be wishing they had brushed up on their Latin before shelling out $60m up front for European and African rights to Puma Biotechnology’s breast cancer drug Nerlynx. Fabre’s decision to buy in came less than six weeks before Puma reported disastrous first-quarter results, showing that Nerlynx had significantly missed expectations. First-quarter sales of $45.6m came up considerably short of the $67m the market had been expecting, prompting a slew of analyst downgrades and a 20% drop in Puma shares. The miss was largely down to patient discontinuations due to severe diarrhoea, a side-effect of Nerlynx that requires anti-diarrhoeal medication to be indicated as part of treatment. It seems that even these measures cannot persuade already sick patients to remain on the therapy – nor, more importantly, to lure new patients in to replace those who have made it through the 12-month treatment window. Alongside the $60m Pierre Fabre has already paid, the group is also on the hook for $345m in regulatory and commercial milestones. Given the worsening outlook for Nerlynx, Pierre Fabre might be grateful that it chose such a back-end heavy deal.

Polyphor plunges as lead asset written off

A year after pulling off the largest Swiss biotech IPO in over 10 years Polyphor has reminded its new investors about of the risks of drug development. Two phase III trials of its lead asset, an experimental antibiotic called murepavadin, have been halted on higher than expected rates of acute kidney injury. This was known to be a potential issue with the project but Polyphor believed that toxicities could be managed; a safety analysis is being conducted and a decision will be made in the coming months on whether the project is salvageable. The signs are not promising – Polyphor said 56% of patients treated met the criteria for acute kidney injury, much higher than expected. Murepavadin has been designed to fight the superbug Pseudomonas aeruginosa, a multidrug-resistant pathogen against which new agents are desperately needed, but even here this level of toxicity is unlikely to be acceptable. The company mooted fixes such as changing the trials’ inclusion criteria or dosing regimens, but investors appear to be expecting the worst: Polyphor shares fell a further 21% today after slumping 49% on Friday, valuing the company at SFr116m ($113m), below its year-end cash of SFr134m.  

Verily pivots to nanoparticle drug delivery

The Crispr company Verve Therapeutics was launched this week with a funding round of $58.5m led by Google’s venture arm, GV. And Verve is also partnering with Google’s sister company Verily, whose nanoparticle technology will be used to help develop drugs for coronary artery disease. This is a bit of a change of plan on Verily’s part – it had initially intended to use the nanoparticles, on which it has been working since it was still a part of Google X, for diagnostic applications. The notion then was that the particles would attach to particular types of cells and be detected by a separate device. But the group now says that, theoretically at least, nanoparticles can be engineered to deliver therapies to individual cells or tissues, though it admits that it will be tough to develop a product capable of targeting drug delivery that precisely. It is focusing on lipid-based nanoparticles including liposomes, which it hopes will fuse with the targeted cell’s membrane and deliver the therapeutic payload – Verve’s Crispr nucleases and base editors. Combining two still unproven concepts is risky; still, with a market cap of more than $800bn, Google will be able to cope if its investment goes south.

Verve Therapeutics’ venture funding
Date Round Investment ($m) Lead investor Investor
May 7, 2019 Series A 58.5 Yes GV
      - Arch Venture Partners
      - F-Prime Capital
      - Biomatics Capital
Source: Company communications. 

Pfizer swoops on Therachon in $340m deal

After months of sitting on the bench Pfizer is back in the M&A game with the buyout of the private Swiss biotech Therachon, for an initial $340m. The purchase price might be little league but the move is right in Pfizer’s rare disease wheelhouse, giving it TA-46, a phase I candidate for achondroplasia, also known as short-limbed dwarfism. Pfizer’s focus is primarily on TA-46 and the follow-on agent TA-100, so the rest of Therachon, which includes the short bowel syndrome project apraglutide, will be spun out into a new company. The pharma giant will retain a stake in this via its venture arm Pfizer Ventures, which participated in Therachon's $60m fund raising last year. In taking a punt on achondroplasia Pfizer will be competing against Biomarin’s vosoritide, the most advanced research project in this field. Biomarin is conducting a 110-patient trial in 5-14 year olds that is due to read out by the end of the year. But vosoritide has not been without its issues, and the injection of Pfizer’s cash and knowhow could narrow the gap between the two assets. 

Selected achondroplasia assets
Project Company Status 2024e sales ($m)
Vosoritide Biomarin Pharmaceutical Phase III 586
TransCon CNP Ascendis Pharma Phase I 21
TA-46 Therachon  Phase I n/a
Total 607
Source: EvaluatePharma.

J&J’s $1bn hip settlement is a drop in the ocean

The $1bn Johnson & Johnson is reported to have paid to settle lawsuits around its defective Pinnacle range of hip implants is a hefty amount of money – but it is dwarfed by the $2.9bn in cash it paid in 2013 to settle claims from plaintiffs harmed by its ASR hips. Perhaps this is why shareholders barely reacted, sending the shares down just 1.5%. Yesterday’s settlement put about 95% of the 6,000 or so Pinnacle claims to bed, but the remainder will take more time and money. And J&J has other legal wrangles to think about. Most of the US cases of the company's pelvic mesh implant litigation have been resolved, but class actions have begun in several other countries. It is also on the hook for $4.7bn as a result of its baby powder being linked with ovarian cancer and mesothelioma. Billion-dollar fines might be viewed as a cost of doing business for these hugely profitable, multinational healthcare companies, but surely only up to a point. The bills are adding up for J&J, and while executives have expressed confidence in overturning the baby powder verdicts, losing could cause a more dramatic shareholder reaction.

Acthar is dead… long live Acthar

Mallinckrodt’s efforts to expand beyond its best-seller, H.P. Acthar gel, have again come up against a brick wall. The company has abandoned CPP-1X plus sulindac after the combination failed a phase III trial in familial adenomatous polyposis. The project had been seen as the group’s most promising pipeline prospect, but that is not saying much: EvaluatePharma sellside consensus forecast sales of $49m in 2024. No matter, Mallinckrodt has other important readouts approaching, but a couple of these feature a familiar name: Acthar. First-quarter sales of the product disappointed, but Mallinckrodt still reckons it can hit $1bn this year, helped by upcoming data in rheumatoid arthritis and multiple sclerosis. Beyond Acthar, Mallinckrodt is looking to phase III projects including its skin substitute Stratagraft and terlipressin. And it has not given up on its Nieman-Pick C disease candidate VTS-270, despite a pivotal trial failure last year. During yesterday’s earnings call Mallinckrodt said it had conducted various post-hoc analyses and would meet the FDA to discuss the project’s next steps. With the DOJ still investigating alleged improper sales practices at Acthar’s originator, Questcor, Mallinckrodt could do with something more promising to turn to.

Key Mallinckrodt readouts in 2019
Project Indication Trial Data due 2024e sales ($m)
H.P. Acthar Gel Rheumatoid arthritis Phase IV, NCT02919761 Jun 2019 273*
  Multiple sclerosis Phase IV, NCT03126760 H2 2019 229*
Stratagraft Partial thickness burns Phase III, NCT03005106 Late 2019 32
Xenex Neuroprotection post-cardiac arrest Phase III, NCT03176186 H2 2019 26
Terlipressin Hepato-renal syndrome Phase III, NCT02770716 Late 2019
*Indication sales. Source: EvaluatePharma.

Acacia takes a serious blow to its credibility

The first US complete response letter for Acacia’s lead asset, Barhemsys, was brushed off as a minor inconvenience last October, and investors bought into the explanation. This is why today’s second CRL is especially wounding to the credibility of Acacia management and the analysts who had talked up the story, given that it appears to cite precisely the same problem as before, namely deficiencies at Acacia’s contract manufacturer for Barhemsys’s active ingredient, amisulpride. Acacia had fallen 25% on the first CRL but later recovered all its losses, helped partly by notes from Edison Investment Research assuring the markets that Barhemsys was “ready” and “on track” for launch for post-operative nausea and vomiting in the first half of 2019. The second CRL sent Acacia’s stock down 44% in early trade today. With the company now moving to appoint an alternative amisulpride supplier only one thing can be said to be certain: resolution of this particular mess will be anything but speedy.

Trelegy swims against the respiratory current

If, having seen how sharply sales of Advair were falling, you had written off Glaxosmithkline’s efforts in respiratory medicine you would have missed the quiet rise of Trelegy Ellipta. The new drug, a triple combo licensed from Innoviva, is in rude health, and is one of the only COPD products to boast strongly growing total and new US prescriptions, according to analysts at Evercore ISI. Yesterday things got even better when Trelegy scored in the Captain study, which tested it in 2,544 asthma patients head to head against Breo Ellipta, Glaxo’s marketed asthma and COPD product. Trelegy met the primary endpoint, Glaxo said, beating Breo in terms of 24-week FEV1 for both doses tested, at p<0.001. Though the key secondary measure, annualised rate of moderate/severe exacerbations, was missed, rendering other analyses descriptive only, Glaxo said it would seek to file Trelegy in asthma on these data. EvaluatePharma sellside consensus sees Trelegy sales climbing from $208m last year to $1.4bn in 2024, but these are all derived from COPD, suggesting that use in asthma represents an added bonus. Innoviva investors seemed surprise by the Captain result, sending the company’s stock up 7% yesterday.

Selected respiratory disease combination drugs
        Sales ($m)
Drug Type Company Approved use 2018 2024e
Advair LABA + steroid Glaxosmithkline COPD/asthma 3,269 1,174
Anoro Ellitpa LABA + LAMA Glaxosmithkline/Innoviva COPD 636 1,004
Breo Ellipta LABA + steroid Glaxosmithkline/Innoviva COPD/asthma 1,454 1,544
Trelegy Ellipta LABA + LAMA + steroid Glaxosmithkline/Innoviva COPD 208 1,392
Ultibron Neohaler LABA + LAMA Novartis/Vectura COPD 454 556
Source: EvaluatePharma.

Astrazeneca doubles down on oncolytic viruses

The limited clinical progress most oncolytic viruses have made so far does not appear to be putting Astrazeneca off. The UK group is making another, albeit low-risk, bet on the technology with today’s $10m deal with France’s Transgene. The fact that little has been heard about Astra’s earlier 2015 foray into the world of oncolytic viruses (OV), a deal with Omnis Pharmaceuticals, could explain why Astra is trying again with Transgene, which under the latest tie-up will develop five armed OVs. The timing of the Astrazenca deal could also be fortuitous for Transgene, which is still awaiting futility analysis of a trial of a separate OV, Pexa-Vec, under a joint venture with Sillajen. Failure here would be a big blow to the wider OV field – a risk overhang that could explain the modest-looking up-front Astra has paid. But Astra is not alone in hedging its bets on a technology that so far looks best suited to combinations. In February 2018 Merck & Co paid $394m for Viralytics, in essence to study Cavatak with Keytruda, and this was quickly followed by Boehringer Ingelheim buying out its OV partner Viratherapeutics for $245m. For just $10m Astra seems to have picked a very affordable ride on the bandwagon.  

Selected oncolytic virus deals
Date Source Buyer Deal type Up-front ($m) Note
May 2019 Transgene Astrazeneca Licensing 10 Five research candidates
Sep 2018 Viratherapeutics Boehringer Ingelheim Acquisition 245 VSV-GP project, preclinical
Feb 2018 Viralytics Merck & Co Acquisition 394 Cavatak, phase II asset
Nov 2017 Oncolytics Adlai Norte Licensing 5 Far East development of Reolysin
Oct 2017 Turnstone Biologics Abbvie Licensing Undisclosed Ad-MG1-MAGEA3, phase I/II asset
Dec 2016 Ignite Immunotherapy Pfizer Acquisition Undisclosed 50% stake
Dec 2016 Psioxus Bristol-Myers Squib Licensing Undisclosed NG-348, preclinical asset
Dec 2016 Takara Bio Otsuka Licensing Undisclosed Japan rights to HF10
Nov 2016 Virttu Biologics Sorrento Acquisition 25 (equity) Seprehvir, phase II asset
Jun 2016 Psioxus Bristol-Myers Squib Licensing 10 Enadenotucirev, phase I collaboration
Jun 2015 Oncos Targovax Acquisition Undisclosed Structured as a 50/50 merger
Jan 2015 Omnis Astrazeneca Licensing Undisclosed VSV project, phase II
Nov 2013 Jennerex Sillajen Acquisition Undisclosed $150m biodollar value
Jan 2011 Biovex Amgen Acquisition 424 Imlygic, approved for melanoma in 2015
Source: company statements.

Sequencing groups prompt US pricing reversal's reversal

Lobbying by more than 60 organisations including the genetic testing groups Illumina, Thermo Fisher Scientific and Myriad Genetics has scored its first victory in the shape of the Centers for Medicare & Medicaid Services agreeing to reconsider a coverage decision for certain DNA tests for early cancer. In March 2018 CMS made a ruling that was interpreted by many Medicare contractors as restricting coverage for next-generation sequencing tests for inherited – rather than spontaneous – mutations to patients with advanced cancer. Specifically, the ruling meant that tests could only be used in patients with recurrent, relapsed, refractory, metastatic or advanced breast, ovarian and colon cancers. Coverage of testing in patients with early disease, which had previously been reimbursed, was thus denied. CMS is now reopening this coverage determination to reconsider the evidence for tests used to identify those with early hereditary cancer who might benefit from targeted treatments. Whether the CMS will in fact decide to cover the tests once again is another question, though the reopening is probably a positive sign for the testing companies. The verdict is due in October. 



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